Tinubu Urged to Promote Domestic Refining and End Imports

 

Recent developments in Nigeria's downstream oil sector underscore the paradox of abundant resources amidst economic challenges. The Nigerian National Petroleum Company Limited pledged six million barrels of crude to the Dangote Refinery, yet smaller domestic refiners face difficulties in starting production, leading to rising pump prices for refined products. President Bola Tinubu must expedite a program to achieve domestic self-sufficiency in refining.

Ministry officials, including the Minister of State for Petroleum, Heineken Lokpobiri, acknowledged that the NNPC's failure to supply crude to the Dangote Refinery and other modular refineries has hindered their operations. They attributed this to lower-than-expected crude production.

The Crude Oil Refinery Owners Association of Nigeria expressed concern about several near-complete refineries facing supply uncertainties.

As a result, pump prices have increased, impacting business operations and causing hardship for Nigerians. Manufacturers cited the rising price of diesel as a factor contributing to increased production costs.

Dangote Refinery, despite its official opening in May, has struggled to commence production due to a lack of crude supply. Nigeria, with over 37 billion barrels in crude oil reserves, is Africa's largest importer of refined petroleum products.

The country's four state-owned refineries have been dormant for over three decades, incurring losses through turnaround maintenance contracts. Instead of privatizing these refineries, the government has obstructed private local refining initiatives.

Tinubu, who oversees the petroleum portfolio, must swiftly resolve these issues. The solution lies in achieving self-sufficiency in refining. Nigeria spent $11.3 billion on imported refined products in 2021, and this figure rose to $23.3 billion in 2022. Other OPEC member states have robust refining capacities, making it imperative for Nigeria to adopt a national emergency program focused on private sector-led domestic refining and divestment of state-owned refineries.